Palmetto State Armory’s Secret to Scaling Ecommerce

Travis Mariea | Flxpoint (00:01.39)

Hey everyone, welcome back to another episode of The Modern Merchant. Today we have Reuben Bakker from Palmetto State Armory. Reuben thanks for joining man.

Reuben Bakker (00:10.816)

Absolutely. Yeah, thanks for having me.

Travis Mariea | Flxpoint (00:13.304)

Cool, so those in the online retail world, the e-commerce, firearms, tactical, outdoors world might have heard of Palmetto State Armory, but would love for you to of just give us a high-level overview of what you guys do, stuff we might know already, but maybe some we don't.

Reuben Bakker (00:28.951)

Sure, yeah. Well, for people that are in the Southeast, they usually know us from our retail stores. We've got nine retail stores kind of throughout the Southeast, so people might see them on the side of the freeway or billboards or whatnot. But we're actually primarily an e-commerce company. Been around for about 15 years. Started out of our CEO's garage, which is kind of a pretty cool story. Started out just selling mostly ammo and some parts and then really rapidly expanded into kits and all sorts of things until eventually..

they acquired enough manufacturers and built their own in-house manufacturing to essentially be a vertically integrated manufacturing company. So essentially we sell firearms and ammunition online, which a lot of people don't even realize you can do. But if it's serialized item, we do send those to an FFL for background check and transfer and all that kind of stuff. So we have a lot of the technology to support that part of the process in place as well.

We actually manufacture a lot of what we sell ourselves in-house with a lifetime warranty. So Palmetto State Armory has its own line of AKs, ARs, pistols, and some even proprietary designs that you can only get at PSA, which is pretty cool. So yeah, it's a fun space to work in. We are also selling other manufacturer's items as well. And where Dropship comes into the equation is looking to kind of expand our footprint beyond

Travis Mariea | Flxpoint (01:47.106)

Yeah.

Reuben Bakker (01:59.041)

just the firearms and ammunition side, because there's a lot of accessory type items or things that go hand in hand with outdoors enthusiasts. So that's what we're looking to expand into with the dropship program.

Travis Mariea | Flxpoint (02:14.19)

Yeah, definitely. We'll talk more about that, no doubt, here in a little bit. You guys are known for being really vertically integrated. You've got a really robust operation you guys have over there. Is it all D to C, though? I know you said you can only buy some of your stuff on Palm Island Estate. Do you guys sell to businesses or government at all, or is it all directly to the consumer?

Reuben Bakker (02:35.818)

Yeah, so we're primarily to consumer directly, which allows us to keep our costs really low, right? Because we're essentially direct consumer manufacturer. But we do actually have a wholesale program as well. So we do have a dealer sales department that handles wholesale accounts and primarily, obviously, other gun stores and things like that that want to carry our product. And we do have a dealer website that they can actually purchase through as well once they're kind of an authorized

Travis Mariea | Flxpoint (02:47.651)

Yeah.

Reuben Bakker (03:05.514)

dealer in our network, they can actually log in and purchase firearms directly through that site as well.

Travis Mariea | Flxpoint (03:11.606)

Awesome. Okay, cool. That's good to know. I you guys do a little bit everything it sounds like. Awesome. And you guys, saw, I was just looking at your website. You guys are involved in the community a lot in South Carolina, which is awesome. That's definitely one way to differentiate, and I'm sure it's important to your guys' staff. How else do you differentiate? You know, I know you're gonna be bringing on some products from other brands and things like that. Like, what do you guys think about Palmetto State? How do you differentiate from your competitors?

Reuben Bakker (03:14.87)

yeah.

Reuben Bakker (03:20.769)

Mm-hmm.

Reuben Bakker (03:36.599)

Sure, yeah, great question. So there's a lot of ways. mean, the PSA manufactured products all have a lifetime warranty and I've seen this company stand behind that time and time again for all sorts of things. know, as firearms guys, a lot of times like to tinker and modify and sometimes those modifications don't always work out quite right. But our company tends to do the right thing no matter what. They kind of stand behind our product.

And that's one thing that's really in my mind sets us apart. Another is just our CEO's vision for the 2A community and for 2A rights as in the country. very much kind of puts his money where his mouth is. In a lot of ways, I've seen them make some pretty big sacrifices towards, he has a saying, freedom over profits. And I see him back that up every day where he's

putting freedom above just making money. Really just tries to put the minimum amount of revenue back into more product development and customer support to grow the business and also be a voice for the American people. And it shows in kind of how he operates the business every day. So for customers that really appreciate that and care about that, I think that's kind of a key factor in why they would choose to support our company.

Travis Mariea | Flxpoint (05:04.258)

Yeah, no doubt. I saw the freedom over profit. was doing some research and that's always great to see. mean, obviously when you believe strongly in a product, you want to make sure that it's accessible to those that want it, need it. It's awesome, especially in this space. You're over the business administration, business systems.

Reuben Bakker (05:08.138)

Mm-hmm.

Travis Mariea | Flxpoint (05:25.006)

You you kind of manage the infrastructure from a technology perspective, right? I know a good piece of it, right? So you talk about your tech stack and you know what you guys are using today might be looking at the future. Just how do you guys think about your tech stack and how it supports your operations?

Reuben Bakker (05:39.405)

Sure. Yeah, great question. yeah, I oversee all of the business systems on the backend. So we have a chief of e-comm that handles essentially front end operations, but obviously we work very closely together. So, you know, customer acquisition, sales, that side of things is kind of his playground. And then once the orders are placed and come into our system, I kind of take over from there in terms of, you know, the teams and how they're divided. So our tech stack is quite varied. We are using NetSuite as our core ERP.

 

And that's where all of our inventories housed, our accounting, all of those types of things. We are multi-subsidiary, so there's a lot of different types of transactions that we have to manage and support across multiple companies under the JJE Capital umbrella. So JJE Capital Holdings being the parent company, which by the way is only three guys, including Jamin, who's my boss. So privately held company, but they essentially, as they brought on other

manufacturers and customer companies over the years, they had to kind of be brought into that ecosystem to support their manufacturing processes and the entire, you know, life cycle of both product and manufacturing, as well as demand planning and MRP, all those types of things. So NetSuite's at the core, but we do have a lot of different systems integrated into it. So we use a WMS system called the POSCO for our warehouse operations and logistics. Obviously, we do have some

various dropship integrations going on. We also tie to the website, of course, which is running on Magento V2. lots of different pieces of the puzzle. Salesforce is probably our other largest, second largest system that we operate all of our customer support, warranty claims, all those types of things are handled through Salesforce.

Travis Mariea | Flxpoint (07:33.966)

Cool, and so you guys have been a customer of Flxpoint for about a year now. I know we spoke a while back about all the different things that we might wanna do in the future, what we're focusing on now, all that kind of stuff. know we kinda talk about a multi-phased approach on how we might be able to work together in general, but we'd to know what originally did you come to Flxpoint for when you were looking around with your current stack, right? How did you find us and what were you looking for?

Reuben Bakker (08:00.055)

Sure. Well, we found you through actually one of my guys, one of my business analysts was familiar with inventory source and kind of dove down the rabbit hole and realized that there was connection there as well as kind of the enterprise level architecture that we were needing. We currently process in the neighborhood of I would say roughly 3000 drop ship orders a day, give or take on any given day. Obviously during peak that can really increase.

But one thing that we were really struggling with, so I've been with the company about five years and I was around, I think eight years ago that they set up the previous integration, which was just with a couple of vendors, but it was limited to just EDI. And that had been kind of set it and forget it had been running for years without much babysitting, at least to my knowledge, until I started kind of peeking under the hood and realizing that the poor

operations guys that were managing the day-to-day orders were essentially just drowning and manually handling a lot of day-to-day order management type of scenarios, whether it was things that were out of stock or customer cancellations or address changes, things like that. It was all extremely manual. And they were doing a lot of that through just talking to the sales rep at the vendor. So one of the key things that we needed to do was not only

expand our footprint in terms of the number of vendors that we integrate with, but we also needed a tool that would allow us to use more than just one type of integration, right? So beyond just EDI, some of our newer dropship partners are more up to date on using APIs or any other type of integration. Platform and Flxpoint allowed us to essentially choose how we integrate with each partner.

And then the other big thing that we're not quite there yet, but the vision for it should come together, I think, this year is we're currently managing our dropship inventory through NetSuite directly. So essentially we have a merchandising team that every day is looking at reports of what vendor has, what items in stock, what their pricing is, and then they're manually toggling which vendor we would prefer to choose to create a purchase order for.

Reuben Bakker (10:21.974)

for when the sales orders come through. And the problem with that is obviously stock changes throughout the day, every day. Pricing can change as well. And we don't consolidate orders. So if it's a multi-line order and customer chooses five or six things, we're not necessarily optimizing how those orders go out to our vendors. We're just sending it to whoever the preferred vendor is in NetSuite. So obviously there's a pretty good amount of cost savings.

out there to be had if we optimize how that flows.

Travis Mariea | Flxpoint (10:56.984)

Yeah, exactly. That's kind of the phase two I was alluding to, right? Where it's, we talked about the preferred vendor, which I wasn't completely familiar. I knew there were some restrictions there, some limitations within NetSuite in general if you just set up by default with the preferred vendor. And we've kind of gone down that rabbit

looking into it and seeing the same thing across a lot of our customers. And it's really exciting to be able to do that. Obviously, we know it takes some time and effort from a business operations perspective. Like, how do we map in these SKUs and how do we move from a manual process that we've had for years into a more automated one? And I'm personally really excited for that flow.

Reuben Bakker (11:16.46)

Mm-hmm.

Reuben Bakker (11:31.69)

Yeah, absolutely.

Travis Mariea | Flxpoint (11:33.026)

And when we do roll it out, how do you guys think about that? What's the main ROI or driver that you're looking to gain from that? Have you thought about how to quantify that move?

Reuben Bakker (11:42.955)

Yeah, absolutely. So there's a number of different things. You one of the easiest things is just the margin on the order, right? So we can see the improvements to not only the margins based on the item cost itself, but also the drop ship fees that are associated with each sales order. So if it's a multi-line order and we send out three POs to three different vendors, well, we're paying shipping for each of those orders as well as potentially drop ship fees. So there's significant savings right off the top by just shipping it.

more efficiently out of one source. The other thing too is better customer experience. So one thing that customers often get confused by is they order four or five things and only two things show up in a box and they're not sure what's going on with the rest of the order, right? And so minimizing how many packages actually go to the customer is a better experience for the customers as well. There's also the

aspect of just inventory availability, which obviously leads to conversions. Because if we have a great, beautiful website page that's on the top of Google, but it's out of stock, it doesn't really do us any good. And it's really silly to have an out of stock page when we've got two or three other vendors that might also have that available. now, like I said, we're limited to manually setting that daily and having something that can aggregate how much is in stock across all of the sources that we have.

is obviously preferable. So that is a little bit more tricky to report on from an inventory availability standpoint because it's point in time. And it's a little bit more tricky to say, all right, from this time to this time, it was out of stock. And then when it went back in stock, the conversion becomes this new value. We've done some of that for our in-house fulfillment metrics, which does get pretty interesting. Obviously, you can't convert if it's out of stock.

But that should definitely lead to more revenue. So better margins and more revenue at the same time should be kind of a win-win.

Travis Mariea | Flxpoint (13:49.39)

Sounds like a win-win. That's what we're all looking for, right? Better margin, more revenue. But you bring up a good point, right? Like you can't convert if it's out of stock. And that's a big part where, you know, Dropship takes some investment to be able to support it and support it the right way to where you can deliver that same customer experience that you're delivering today. But when you do, that's really what the promise is. It's to have things that are in stock longer when you have overlapping products across multiple different sources, right? And then on top of that, the other promise it can deliver is expanding your

Reuben Bakker (13:50.304)

Yeah, that's right. Yep.

Travis Mariea | Flxpoint (14:19.344)

So I know the preferred vendor NetSuite switchover that we plan on doing here is a big goal for this year. But the other big one that we're working on right now is expanding that catalog into new categories and all that. So however much you can share, I would love to talk about that because that is the big part of Dropship. Number one.

I love the ability that you can just have that automatic fall over and keep things in stock of products you already do have. But the second best thing that Dropship brings is expanding that catalog and bringing more customers to your site. So we'd love to know how you guys are thinking about that from a strategic standpoint and how you're planning on rolling that out.

Reuben Bakker (14:55.232)

Yeah, absolutely. you know, PSA is built on a really solid foundation of firearms manufacturing. And that's, you know, essentially the brand that we're known for, right, is if you go on YouTube or any social media, you know, channels that are firearms enthusiast based and you look at PSA products, they're reviewing our ARs and our AKs and our handguns and AAC ammunition that we make in-house, things like that. And, you know, people know us for that. But

The people that are buying those items also typically enjoy fishing and hunting and camping and just outdoors, you know, in general. mean, think of, you know, big box stores like Cabela's or Bass Pro. You know, they definitely are a large firearms manufacturer, but they carry a lot more than just firearms, right? And, you know, we would like to be a one-stop shop for our customers that give them the incentive and the ability

to get what they're looking for on a site that they're familiar with and that they're already buying from. Might as well be able to add some accessories or even some clothing to go along with those items as they're on our site already. Obviously, if you are already paying for shipping to get something to you or you're maybe qualifying for free shipping, it makes a lot more sense to just

vital in one place versus having to piecemeal it out from a bunch of different spots. So, yeah, we have a merchandising team who is overseeing that catalog expansion, if you will. So there's a lot that has to go on behind the scenes to make that actually happen in terms of website categorization, know, the product page build outs and just how all of that is configured. You know, some of these items, even though they may not be firearms, do still have some

legal loopholes, not loopholes, but legal blocks that we have to kind of move around and navigate. Things like pepper spray, for example, and we already carry pepper spray, but certain locations have actual capacity limits on how much pepper spray you can have in your little pepper spray container that you order. So we have to have all the data in there for all of those types of items to

Reuben Bakker (17:18.378)

make sure that we're within compliance with all those different types of items across all the states in the country.

Travis Mariea | Flxpoint (17:25.166)

Yeah, yeah, and that nuance is really why feel we see so many successful online retailers in the firearm industry, right? Amazon has not one touched that industry and a lot of customers don't even attempt it, or lot of our customers, lot of online retailers don't even attempt it because all that nuance, keeping up with all the compliance, all the legal side of things. You mentioned earlier that some people might not even know you can buy firearms online. Can you talk about the process? Like, if you go to buy a firearm online.

what does that look like and how do we make sure it is following all the legal, all the laws out there and following exactly what needs to happen to make sure it's done safely.

Reuben Bakker (18:04.48)

Yeah, absolutely. yeah, our website will essentially tell you as you go through the checkout process, if you have a serialized item, which would be a firearm or even a firearm component that has a serial number on it, it's like a lower receiver, it'll tell you that that has to ship to what we call an FFL, that it's a Federal Firearms Licensed Dealer, be it a gun store or a pawn shop or whatever's close to you. And so we have something called the FFL Locator on our website.

that has an up-to-date repository of all the FFLs that we deal with, that we have the paperwork on file. The ATF requires us to have a copy of their license on file as of right now. And so we have those available on the site. You can choose based on your location, what's convenient or close to you. If you happen to be close to a PSA store, you can choose a PSA store and then there's no transfer fee. Typically, most gun shops are going to charge you between maybe $25 to $50. Some are even higher than that.

So it's always a good idea to call the shop first if you haven't done a transfer with them before. Just ask what their fee is to do a transfer. But in a nutshell, when you go through the checkout process, you select whichever FFL you want to use for your transfer. And then we will ship the firearm to that FFL as well as notify you that it has shipped and it's on the way. And then they typically will call you to let you know that your order's there.

And then you go in and do your 4473 and your background check and do all your transfers at the store that you've selected. If you've purchased other items at the same time, let's say some extra magazines or a holster or just a range bag or whatever, those will ship directly to you on a separate shipment. So we split those out so that the FFL only has to deal with a serialized component.

One other thing to kind of point out that people definitely need to be aware of is, know, whatever your local laws are, are obviously ones that we have to, we have no control over for one, and we have to adhere to those. So one thing that people may not always realize is a magazine capacity restriction, which does include magazines that are included with a gun itself. So if you're in a state that requires like a

Reuben Bakker (20:24.332)

10 round max or 15 round max or 12 round max magazine, make sure that you're choosing a gun that either already has a limited capacity magazine included with it or just expect that it's going to come without a magazine because we'll end up having to strip that magazine out of the order if it's going to one of those states that has a capacity limit on the magazine. And that is explained on the website, but sometimes people miss that.

Travis Mariea | Flxpoint (20:47.692)

Yeah, so.

That's a great, Reuben, that was amazing. I couldn't have said any better. mean, really anyone out here listening that might be selling stuff online, say, you know what, I'm a firearms enthusiast. I want to start selling guns online. I think you just talked them out of it because there is a ton of It is so complicated. I never envisioned, you when we launched Flxpoint, we didn't really pick an industry or whatever, but firearms has become our top industry because of all that nuance and just the way that we built Flxpoint to be so flexible

Reuben Bakker (21:05.64)

It's complicated. Yeah.

Travis Mariea | Flxpoint (21:20.304)

with the rules engine, right? If it comes from, if there's ammo and it's coming from Illinois, right? Or if it's a California order, treat it all differently, make all these decisions, split the order, split the holster off and send that to one address and the other to the FFL. All that stuff is super complex. mean, California, feels like every other year we've got new stuff we wanna tackle there. We're actually looking at scoping out and trying to help with the new law that...

Reuben Bakker (21:34.485)

Right.

Travis Mariea | Flxpoint (21:47.15)

to be shown and improved and saved and indefinitely on the servers, right? And then also, you know, maintain PII throughout all that. So there's all these opportunities to solve these problems that are never ending in this industry, really.

Reuben Bakker (21:56.172)

That's right.

Reuben Bakker (22:01.28)

Yeah, yeah, it's changing all the time. And so we have to stay 10 steps ahead of it. The other thing that PSA does that I've always been really impressed with is they will always take, they will do as much as they can for the customer up until the point that the state says this is the cutoff date. So we've done things like Washington State a couple of years ago.

I think it was 2024 in their summer 2024, they introduced like a mag capacity limit. But the way that they wrote the law, if you already had one, you could keep it. You just couldn't import any more into the state up until like a certain drop dead date. Right. And so what we did as a company is we actually just prioritized any orders going to Washington that contain a magazine. And we made sure that up until the very last minute that we could legally sell them and get them into the state. We did that.

And that way those customers, which my brother was actually living in the state at the time. So I told him like, go ahead and get your order in. we were shipping a ton of magazines into the state right up until the point where it was cut off and those customers just weren't able to do it anymore. But we'll make strategic moves like that. And we have to obviously make changes within our system on the fly to support those types of things. When those laws pop up, we not only have to make sure that we're within compliance, but we also can support our customers because that's what we really ultimately want to do.

Travis Mariea | Flxpoint (23:11.117)

Yeah.

Reuben Bakker (23:26.886)

is get the product to the customer while we legally can. And if that means prioritizing those orders above some other ones, that's what we'll do for a few weeks just to help those guys out.

Travis Mariea | Flxpoint (23:38.338)

Yeah, that's a great example. I there's a lot of gun stores out there, but that's a great example of why you guys are the leader. Bunch of gun enthusiasts staying up on the actual laws and everything that you guys need to stay up on to make sure you deliver a great customer service, right? That's exactly what you're looking for. Cool, so let's kind of wrap up with just 2026. What are the goals for PSA? What are you guys doing? I know you expand the catalog and things like that, but if you had to kind of summarize...

your goals for 2026, what would they be?

Reuben Bakker (24:08.428)

Sure, loaded question, man. There's always a lot more going on than what we can actually wrap our arms around. So the key for us is prioritization, making sure that we're working on the right things and towards the right goals. We are, as a company, looking at like a 10-year vision, really, for the company and what we can implement in this next year towards that goal to make sure we're all kind of unified and marching in the right direction.

Travis Mariea | Flxpoint (24:27.234)

Yeah.

Reuben Bakker (24:34.474)

Obviously, technology is rapidly changing. we're definitely looking into, on the technology team, we're looking into AI tooling in a variety of different facets of the organization, whether it's analytics or demand planning, MRP, product, even product descriptions and things of that nature. There's a lot that you are able to do now using new tools that are coming out. Obviously,

quality is something we have to really keep a close eye on. But that's something that we're working on quite a bit. We also have a pretty big goal of adding a lot more dropship vendors. So that's something that we're obviously working together with you guys on quite a bit. So looking to go probably two to three times the volume of dropship that we're currently doing by the end of the year. I think that's definitely feasible with all the kind of foundational work we put in last year with you guys.

There's also constantly new just operational expansions that are happening, whether it's new manufacturing lines or new subsidiaries even that are being brought in. So we actually have multiple NetSuite instances that I manage. One of them is, know, the largest one is the PSA instance, but we actually have two other instances of NetSuite as well that run some of our sister companies. And so those are expanding pretty rapidly.

We've recently gotten into the suppressor space beyond just our retail stores. So now we're actually selling suppressors and just recently started selling SBRs and short-billed shotguns on our site, which has an even more nuanced purchasing process where you have to do your NFA paperwork, fingerprint kit, know, form for all those types of things, which we can actually now support through, you know, online sales.

which is pretty exciting as well. So we're starting to manufacture more of those as well. And we have in the past done some, which we could sell through our retail stores, but our retail stores only encompass North and South Carolina and Georgia. So it's really limited to just the Southeast. So obviously our footprint's a lot bigger than that. So we're excited to be able to offer those types of products to everybody in the US. Well, everybody in the US that lives in a state that they can actually get their hands on this.

Travis Mariea | Flxpoint (26:52.376)

Yeah, very cool.

Yeah, for sure. For sure. Well, I appreciate you peeling everything back and letting us see inside of the PSA operations, man. A lot of good stuff in it. Anything I didn't ask or anything we didn't touch on that you think we should have?

Reuben Bakker (27:07.404)

Not necessarily. No, I mean, I think we're really excited about the partnership with you guys. Definitely appreciate the flexibility, I'm sure hence the name Flxpoint. We're able to integrate using a lot of different types of technology, whether it's a flat file on an SFTP server or an API or old school EDI endpoint that is where the vendor is using that on the other end.

The other thing that we didn't really talk about is the fact that you guys are pulling catalog information. our previous integration platforms were simply transactional. So there was no inventory, no product data feed, nothing like that. We essentially had to do that through either direct integrations through the APIs that we would run on NetSuite scripts. So we have NetSuite scheduled scripts that pull inventory data and then store it in NetSuite.

But as we expand the Dropship program, there are a couple things that became pretty evident. One is the visibility, right? So if you're pulling, let's say, know, 10, 15, 20 vendors instead of two, that becomes incredibly important to have that in a centralized location. And then two, the order management piece is something else that we really saw as being kind of the Achilles heel of the Dropship program. Because when you, or I should say,

as long as you, if you don't have a really good strategy in mind of how you're going to set things up. Because as we were expanding things a couple years ago, you we were having to build some custom integrations to support API integration or, you know, this vendor wanted to do EDI, this vendor wanted to do, you know, a different type of integration with us. So we had, you know, three or four different methods of getting orders to our vendors and

different methods of getting the inventory in, and that is just not scalable. And we're now getting to the point with Flxpoint of getting everything kind of under one roof, so to speak, so that the order management team, the merchandising team, the guys that work on the e-comm side can all essentially have a central platform that lets them see what's available at all the vendors as far as inventory, product descriptions.

Reuben Bakker (29:35.072)

like you said, the rules engines and everything that we'll get into further down the line, which will really help us to not only automate and streamline a lot of the processes, but also allow for a much cleaner SOP, so to speak. So they're able to do their day-to-day tasks in a much more linear fashion and a lot less scattered, which I think will help overall with customer experience.

Travis Mariea | Flxpoint (30:03.746)

Yeah, for sure. And that was the idea, right? That you don't want to be logging into a ton of different platforms and having to coordinate with tons of different teams across different logins, whatever it might be. And ideally, if you're already pulling in the feed and it's available, might as well get it in one central spot and be able to manage it all right there. So, awesome to hear that's working out.

Well great, Reuben, this was amazing, man. Thank you so much for joining. A lot of good stuff on this. I think it was super informative for me and hopefully anyone else that watches this. So thanks again,

Reuben Bakker (30:33.228)

Yeah, thanks again for having me. All right, talk to you later.